PRC Head Praises New Regulations; Defends Rates

Postal Regulatory Commission (PRC) chairman Dan Blair told a Congressional panel Tuesday he hoped the Commission’s early release of new postal regulations would eliminate the need to file a last rate case under the old system.

He also defended the last rate increase, which took effect last spring.

Testifying before the House Subcommittee on Federal Workforce, the Postal Service and the District of Columbia, Blair said the new regulations would enable the Commission and USPS to devote their resources to improving service standards and performance levels.

On Monday, the PRC released a more than 155-page set of regulations governing how rates will be set under Postal Accountability and Enhancement Act (PAEA) which was signed into law last December. The new regulations divide USPS products into “market dominant” and “competitive” categories and use the Consumer Price Index as a standard for capping rate increases (Direct Newsline, Oct. 30).

Blair went on to defend the PRC’s decision earlier this year, which greatly increased rates for standard mail flats (catalogs) by as much as 41%.

“The Commission [previously] emphasized its concern that because of two consecutive settled rate cases the misalignment of rates and costs in standard mail was getting worse,” Blair said. “We warned the postal community tht the upper bounds of ‘normal’ rate increases might have to be extended in the next rate case to allow for the re-alignment of rates with costs.”

In addition, Blair defended the Commission’s decision to hike periodical rates in some cases by more than 18%.

“Costs for first class and standard mail letters have remained essentially flat over the past 10 years and, as a result, the rates for that mail have been relatively stable,” he said. “This is in sharp contrast to the spiraling costs associated with the handling of periodicals.”

Overall, Blair said this past rate case helped set the groundwork for the future.

“The Commission believes its recommended rates under R2006-1 decision provide the foundation for future rate setting under the under the CPI-based ratemaking system required by he PAEA.” He said. “With the new systems in place early, the Commission is providing the postal service with the means to adjust quickly in light of changes occurring in he industry as well as adjustments to meet its financial needs.”